No. of Recommendations: 0
galt67 writes:
Am I way off? I could see where your expenses could be 'per house', not for all five, which would dramatically reduce the monthly/annual income

Yikes! You are correct. I am doing this now with three houses instead of five and I slipped into my personal calculations. The expenses are understated by a ratio of three to five. Actual total expenses are closer to $6830 vice $4100/yr. Adjusted results are:

Cash flow $34,495 which represents 6.9% of equity.

Can you flesh this out some more?

Local tax rate is $.75/$100 assessed value which is usually less than market value.
Fire insurance is about $333/house/yr
Maintenance costs are taken from my own experiences. The $100K acquisition cost per house is for new houses which will initially have low maintenance costs. These can be expected to increase over time.

The point however, remains valid. Even with the figures as adjusted, the income is 70% greater than what can safely be generated from a portfolio of equities only, based on a safe withdrawal rate of 4%. This is a significant difference which may help someone make ends meet when attempting to retire on a small nut.


Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.